First Time Home Buyer – HomeownersInsurance.org http://www.homeownersinsurance.org Homeowners Insurance Tips and News Fri, 28 Jun 2013 15:01:02 +0000 en-US hourly 1 https://wordpress.org/?v=4.8.1 Home Sweet Home Gone Wrong http://www.homeownersinsurance.org/home-sweet-home-gone-wrong/ http://www.homeownersinsurance.org/home-sweet-home-gone-wrong/#respond Mon, 11 Jun 2012 15:31:20 +0000 http://www.homeownersinsurance.org/?p=1655 Owning a home can be an exciting time in life, especially for first time buyers. However, there are a handful of scams of which new homeowners should be wary about. Given the current state of the economy, protecting your money and credit has become increasingly more important. Unfortunately, scammers are equally motivated to pick-pocket for cash whenever they can and will use a variety of creative tactics.

 

Home Repairs

In Massachusetts, a 92-year-old man was scammed out of $90,000 for various “home repairs” that three men conducted. Although they actually did work, it was hardly worth the massive fees they incurred. The men allegedly charged the elderly gentleman $8,000 for a five-hour job cleaning out his basement according to CBS News. Neither the man nor his 70-year-old daughter found the charges odd. Thankfully, the men were arrested and face charges for larceny among other things.

The lesson learned here is to pay close attention to what and how you pay for home repairs. Even professional services can overcharge for painting or plumbing fixes. Comparing rates is the best strategy to avoid paying too much for menial work.

 

Contractors

Don’t let one natural disaster turn into another. The National Insurance Crime Bureau (NICB) published a press release warning homeowners not to be tricked into accepting damage clean-up service offers from “reputable” contractors. Although there are certainly legitimate providers, there are also a high number of door-to-door vendors who will take your money without returning to do the work you paid for.

Those who do show up might use poor quality materials or repairs that aren’t worth the cost. More recently, the NICB mentioned a scam that involves contractors doing further damage to your home to try to convince you further services are needed. Others will have you file a claim on damage that occurred over the years prior to the storm, while claiming that it actually was storm-related damage. Careful oversight of these proceedings, should you choose to hire contract work after a storm, will prevent risk of these scams.

 

Waterline Letters

Playing off the assumptions and ignorance of some homeowners, scams are popping up on technical issues as well. Anita Liggins noticed something was odd about the letter she received in the mail about her responsibilities relative to her waterlines. The letter was from HomeServe USA, who claimed she was responsible for the maintenance and repair of certain exterior waterlines and suggested she look into purchasing insurance from them.

Because of the suspicious elements of the letter (lack of return address, zip code tracking back to a different area than stated in the letter, etc.), Liggins made a few phone calls to determine the legitimacy of the suggestion. Apparently she was not the only one who received the letter scam. Several similar cases were reported for the same area according to WAFB News. The Newport, Ore. City Police website notes that this scam is occurring in multiple cities. Although the letters appear to be from the city, the company is usually illegitimate.

 

Mortgage

By far the most common — and usually most expensive — scam on homeowners is related to mortgages. The California Association of Realtors President LeFancis Arnold stated that mortgage fraud complaints have jumped nationwide by 60% this year alone. Experts think this may be related to the fact that the housing market is in such a desperate state and homeowners are more vulnerable than ever to the appeal of saving money on lower rates.

This is the leverage scammers use to obtain credit information and make fast cash off of homeowners who are deceived by the perceived legitimacy of the mortgage companies. In one instance, a man was called by a company who claimed they could drop his payments from $783 a month to $386. After collecting the fee of $1,900 up front, they informed him that he could quit paying his monthly mortgage. Of course, it was not long afterwards that the bank foreclosed on his condo as payments ceased.

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8 Essential Home Inspection Tips for Home Buyers http://www.homeownersinsurance.org/8-essential-home-inspection-tips-for-home-buyers/ http://www.homeownersinsurance.org/8-essential-home-inspection-tips-for-home-buyers/#respond Fri, 18 May 2012 20:26:03 +0000 http://www.homeownersinsurance.org/?p=1515 The home inspection is one of the most important steps before buying a home. For home buyers, it may be grounds for negotiating price offers, renovations, or necessary fixes. As a fairly comprehensive diagnostic test on the condition of your future home, it is designed to educate both buyers and sellers about deficiencies and problems that should be taken care of to prevent long-term damage. Some issues require immediate attention, and others may be grounds for negotiating fixes prior to moving in. Here are some essential tips on what to pay particular attention to when getting a home inspection.

  1. Attend the inspection

    It is to your advantage to attend the home inspection for your potential new home. Professional inspectors always encourage clients to go to their inspection and accompany them throughout the process in order to see first-hand what is going on. Inspectors will point out problem-areas and arm you with valuable, detailed information regarding the home you may be purchasing. Not being present during an inspection may make it harder to understand the home inspection report, which puts you at a disadvantage when negotiating terms with the seller.

  2. Look for foundation movement

    A common and major problem found in home inspections are signs of foundational movement. Grade sloping or erosion may contribute to cracks in the foundation, which could lead to expensive problems in the future. The inspector will look out for these signs, but it doesn’t hurt to be also be on the lookout for misaligned windows and doors, hairline cracks on the walls or foundation, and uneven gaps on the floor. Don’t hesitate to move furniture and rugs to get a closer look.

  3. Check all electrical systems

    Older homes are notorious for ill-equipped electrical systems. For example, bathrooms may not be wired sufficiently for modern gadgets and are prone to overheating. Be sure all electrical outlets have enough load to support TVs, computers, and other large electrical items. The heating and cooling system also must be top shape; if the system is outdated, consider replacements for an energy efficient model. Also, be on the watch for any exposed wires, which should be corrected by a licensed electrician.

  4. Expect the worst, but assess deal-breakers

    Before an inspection, you should make a mental note of certain deal-breakers the inspection may find. Major fixes can be potentially a major financial blow, so research major red flags and assess your willingness to deal with these issues. Things like mold, termites, cracked foundations, and wiring issues can be quite problematic and hazardous to your health. Knowing what you’re willing to fix and not fix will help you make a more educated decision when faced with inspection results.

  5. Inspect the inspector

    Not all states require home inspectors to be licensed or adhere to a certain standard. There is also no comprehensive background or certification that fully trains an individual for all the conditions that may exist in a home. Even in areas where licensing exists, some programs fall short. It is your responsibility to make sure the home inspector is formally trained or certified to perform a thorough home inspection. This may be done by confirming that the inspector is backed by the National Institute of Building Inspectors (NIBI) or other formal organizations like the National Association of Certified Home Inspectors (NACHI), which insures their knowledge of inspection and the home buying process. It also helps to ask for a reference from your realtor or other people you know.

  6. Insist on detailed descriptions in the inspection report

    The inspection report should provide comprehensive and detailed descriptions for each item inspected. Words like “good,” “fair,” or “poor” without an accompanying explanation can be interpreted in many ways. If your inspection report is filled with vague words and no succinct description or recommendation for repairs, ask the inspector to elaborate with a more descriptive report. Take time to make sure you understand the conditions of each item and ask questions.

  7. Make sure utilities are on in vacant homes

    Prior to your inspection appointment, make sure with the seller that utilities will be turned on to avoid rescheduling another inspection. While vacant properties may be easier to inspect (visually) than an occupied one, there are some major disadvantages. If homes have been vacant for a long time, it may have caused accelerated deterioration of mechanical systems due to bearing and seal damage. There also may be some loopholes in the inspection like undetected leaks and water stains that are not visible due to lack of normal water usage.

  8. Compare home inspection checklists

    All home inspections can be drastically different and vary from state to state, as well as from accredited associations, counties, and cities. Compare the guidelines of reputable organizations and see which checklist suits your potential home best. There are some inspections that do not include asbestos, radon, rodents, lead, or mold, so be aware of what your inspection includes before hiring an inspector.

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Today’s FAQS about the First-Time Home Buyers Credit http://www.homeownersinsurance.org/frequently-asked-questions-for-first-time-home-buyers/ http://www.homeownersinsurance.org/frequently-asked-questions-for-first-time-home-buyers/#respond Fri, 11 May 2012 18:20:20 +0000 http://www.homeownersinsurance.org/?p=1467
The first-time home buyer credit was a part of the American Recovery and Reinvestment Act of 2009, which was also known as the Stimulus and The Recovery Act. It allowed first-time home buyers to take a considerable credit when purchasing a primary residence. As with many other tax credits, there is a great deal of confusion about this one. For example, many people are unaware that the credit has to be repaid. Indeed, it must be repaid in equal installments over 15 years. It is essentially an interest-free, 15-year loan. Although the credit no longer applies to today’s first-time home buyers, it is still relevant for those who claimed the credit previously or have yet to. According to the IRS, if you bought your home in 2008, 2009, or 2010, you may still be eligible to claim the credit. This credit confused many people because many home buyers are unaware that the credit has to be repaid. This article will summarize the act as well as answer important questions about repayment in order to alleviate some of the confusion surrounding the credit. Frequently asked questions about the first-time home-buyers credit are highlighted below.

When was it Enacted?

The American Recovery and Reinvestment Act of 2009 was officially signed into law by President Obama on February 17, 2009.

 

What is the Definition of a First-Time Home Buyer?

To be considered a first-time home buyer under the terms of this credit, you must not have owned your primary residence for at least three years leading up to your new purchase. In other words, it doesn’t literally have to be your first time buying a home. You just can’t have owned and lived in a house for at least three years prior to buying a qualifying residence.

 

Who is Eligible to Claim the Tax Credit?

To be eligible for the first-time home-buyers credit, you must be a U.S. citizen. As mentioned above, you can’t have owned or lived in a primary residence in the three years leading up to the purchase of your new home. If you are married, neither you nor your wife or husband may have owned or lived in a residence that was used as your primary place to live for the three years leading up to the purchase of your new home. Income limits also apply to this credit, so not all first-time home buyers will qualify for it.

 

What if You’re Not a U.S. Citizen?

If you aren’t a U.S. citizen, you are not eligible for the first-time home buyer credit. The language regarding the credit specifically states that people must be citizens of the United States in order to qualify.

 

How is the Amount of the Credit Determined?

The total amount of the credit that you will receive will be equal to 10 percent of the purchase price of the home that you are buying. There is a $7,500 limit for homes purchased in 2008 and an $8,000 limit for homes purchased in 2009 or 2010. Homes that cost $75,000 or more and were purchased in 2008 will qualify for the full credit; homes that cost $80,000 or more and were purchased in 2009 or 2010 will qualify for the full credit as well.

 

What Kinds of Homes Qualify?

In order to qualify for the credit, the home that you are buying needs to be used as your primary residence. This specification is made to keep investors from raking in a bunch of refundable credits. Single-family homes, mobile homes and manufactured homes all qualify. However, vacation homes and rental properties do not. Basically, if you’re not going to be living in the home that you’re buying the majority of the time, it doesn’t qualify.

 

Are there Income Limits?

Yes. There are income limits in effect for the first-time home buyer credit. Single filers who earn between $75,000 and $95,000 will be phased out of qualifying for the credit. Similarly, married couples who earn between $150,000 and $170,000 will be phased out as well. Those figures refer to modified adjusted gross incomes, or MAGIs, which are discussed below.

 

How does the IRS Define Modified Adjusted Gross Income?

Modified adjusted gross income, or MAGI, is calculated by taking your AGI and adding back in things like higher-education deductions, IRA contribution deductions, student loan deductions and foreign income. Your adjusted gross income is calculated by subtracting tax deductions from your gross income.

 

How does the First-Time Home Buyer Credit Differ from a Tax Deduction?

A tax deduction is something that is used to reduce the total amount of your income that is subject to tax. The first-time home buyer credit is a completely different animal. It is not a deduction; it is a credit, which means that it is refundable. A tax deduction does not reduce the total amount of tax that you owe. It simply adjusts your taxable income so that you owe fewer taxes. Some tax credits are not refundable, which means that they can only be used to reduce your total tax liability. A refundable credit, however, can result in a tax refund at filing time. The first-time home buyer credit falls into that category.

 

How can I Access the Money from the Credit?

Although the first-time home buyer credit is like an interest-free loan, the money isn’t handed right over to you when you buy a qualifying home. Instead, it is given as a credit when you file your taxes. If your tax burden is minimal, the extra amount of the credit will be given to you as a refund. In that case, you would receive a check or a direct deposit from the IRS. Keep in mind that it’s not “free money.” It has to be repaid over 15 years.

 

Can I Access My Money before Filing My Return?

No. It is not possible to get an “advance” on the first-time home buyer credit. It may be possible to work something out with your lender, if you can prove that you are going to receive the credit, but there is otherwise no way to get the money ahead of time. You must wait until your return is processed and approved.

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